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Pharma Shares Shrug Off Trump's Drug Pricing Plan

Pharma Shares Shrug Off Trump's Drug Pricing Plan

President Trump on Friday introduced his blueprint to "bring soaring drug prices back down to earth". Indian companies like Laurus labs, Caplin Point laboratories, Granules India, Shilpa Medicare, etc. which are entering in the U.S. market for the first time, will derive some benefits; however, large companies like Sun pharma, Aurobindo and Lupin will see rise in the competition.

The blueprint, which echoes numerous ideas first put forward in Trump's FY 2019 proposed budget and the White House Council of Economic Advisers drug pricing report, focuses on four areas: lowering high list prices set by manufacturers; equipping government and private payers with new tools to negotiate prices; lowering out-of-pocket costs for consumers and taking steps to stop other countries from "freeloading" off of American innovation.

But the White House plan largely drops some of the most aggressive, populist attacks Trump proposed on the campaign trail, mostly sparing the pharmaceutical industry he previously accused of "getting away with murder". What if we said, "No rebates, just a flat price", which would disincentivize drug companies from having higher list prices. "Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies", Trump said. Industry experts were unmoved. "Pharma finds a way to maximize profits".

The way drug prices are determined is fundamentally the same everywhere. It would create unspecified incentives for lower list prices of drugs and would lower out-of-pocket spending by patients. "When foreign governments extort unreasonably low prices from US companies, the USA has to subsidize them", Mr. Trump said Friday, announcing a plan aimed to lower prescription drug prices.

Allow Medicare Part D plans to adjust coverage mid-year if a generic drug made by only one company increases its price. Prescription-drug spending in the USA grew 1.3 percent in 2016, to $328.6 billion, according to the Centers for Medicare and Medicaid Services. American Patients First included a proposal to hold drugmakers accountable for their price increases, which is the subject of several bills in statehouses across the nation. It also looks to accelerate approval of over-the-counter medicines.

Instead, the Trump plan includes changes to Medicare that could lower out-of-pocket costs for some seniors, a suggestion that drugmakers disclose their list prices on television ads and discussion about reforming the system of secret rebates negotiated off drugs' list prices.

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"We have got to negotiate drug prices with Medicare". "If not, all of this other stuff seems like window dressing, important window dressing, but window dressing". In a briefing with reporters following the president's speech, Azar criticized brand-name drug companies for not allowing generic manufacturers access to innovator drug for purposes of FDA-required testing of generic versions to prove bioequivalency.

Downside: Rebate payments are typically pooled together, and companies that administer Part D plans say that helps keep monthly premiums low for everyone in a plan.

The US government has also called to reduce regulatory burdens. The speech came with a request for information, which means the policies will take some time to implement as the administration gathers feedback.

"Let's assume all of the other countries in the world agreed to pay the same price we do-that doesn't guarantee or assure us that the drug company would lower the price in the USA", said Stephen Shondelmeyer, head of the Department of Pharmaceutical Care and Health Systems at the University of Minnesota. "It's material and relevant to know if it's a $50,000 drug or a $100 drug, because often the patient will have to bear a lot of that cost".

CVS, which runs a large PBM, said policies that lowered drug prices would be aligned with its business model and are unlikely to have a negative impact on profitability. Meanwhile Americans are paying more at the pharmacy counter due to health insurance plans that require them to shoulder more of their prescription costs. Health plans provide more favorable formulary placement in exchange for the rebates. Under the new USFDA commissioner, Scott Gottlieb, USFDA has already been approving products at a record pace. Trump's plan calls on providers in the 340B drug discount program to report on how they use the savings.